NATO allies are contending with U.S. President Donald Trump’s request to elevate the alliance’s defense spending goal to five percent of GDP. While twenty-four out of thirty-two members currently meet the two percent benchmark, the suggested increase has revealed considerable fiscal and industrial capacity challenges throughout Europe and Canada.

In recent NATO defense ministers’ meetings and the forthcoming Munich Security Conference, the focus has been on balancing the necessity to deter Russian aggression with the limited capability of many nations to significantly boost their budgets.

Former U.K. ambassador Karen Pierce remarked that few countries can pledge to five percent without substantial economic advancements.

Analysts have categorized NATO into three groups: one comprising the Baltic states and Poland, which are already spending close to five percent; a second group, including the Nordic countries and the United Kingdom, contemplating targets between two and three point five percent; and a larger group that is more hesitant to increase spending due to budgetary limitations.

European officials have also raised alarms regarding industrial capacity, with Italy’s Defense Minister Guido Crosetto and Canada’s minister of innovation, science and industry, François-Philippe Champagne, cautioning that existing production levels may not be sufficient to accommodate the added investment.

NATO Secretary-General Mark Rutte indicated that the new target set during the June summit in The Hague is anticipated to exceed three percent, while U.S. officials have stressed that the focus is on deterring conflict with China, urging European members to take on greater responsibility for their own security.

The ongoing debate over defense spending underscores broader divisions within the alliance about the most effective ways to tackle emerging strategic challenges.